If Chattanoogans Created Local Investment Co-op, Dividend Vouchers Might Become City Currency

Thursday, January 10, 2013

The lococentric theory of prosperity for Chattanooga seeks to enable local investors to put money into local businesses. 

Uncle’s laws prevent local investment, and years of propaganda by the financial industry makes people not see local possibilities for capitalization and profit, as we learned from Michael Shuman in his book “Local Dollars, Local Sense.” 

If Chattanooga is to withstand the coming buffetings in the national economy ignited by Uncle’s drunken excesses, residents might be wise to establish a vehicle whereby local business owners obtain capital from investors. 

Chattanooga needs an internal marketplace for money that bypasses Wall Street and Washington. 

Possibly the best vehicle for this development would be a co-op. 

Co-ops profitable, but members are shareholders
I’ve learned about the co-op business model from Robert McCarty, the communications director of Volunteer Energy Cooperative. His co-op, founded in 1935, sells electricity in 17 counties in East and Middle Tennessee, including Hamilton and Bradley with more than 8,000 pole line miles. Twenty-two such cooperatives operate in our state. 

Many types of co-ops work in our area. Credit unions are co-ops. One local art gallery is a co-op. Farmers’ market activists are creating a buyers co-op. 

Groups such as Tennessee Farmers Cooperative (made up of 73 co-ops) help farmers market milk, veggies, grain and tobacco. They supply credit and services.  

Co-ops differ from other businesses in that membership is voluntary. They are democratically controlled, with one vote per member. 

They operate at cost to the benefit of their members and usually are connected to a place.  “Cooperatives exist to meet the needs of their members for products and services and to meet these needs as economically as possible,” Mr. McCarty says. “They are not in business to make money for investors, as other types of businesses must do.”

Now here is the point that should thrill people who are willing to consider new ways to invigorate local economy.  

A co-op does not keep the excess money it makes. “Profit” is returned to the members. The dividend might be a “patronage refund” or a reduced rate or fee, Mr. McCarty says.  

Local investment co-op could be basis of city currency

Co-ops generally are connected with a given locale. A Chattanooga Investment Co-op would allow people residing in the area to put money into the pot. Co-op staff would select the most profitable local shops, service businesses and other entrepreneurs for support by “patient capital” (investors willing to wait on returns, with a long-term view).   

Eventually the co-op would become something like Co Lab, giving entrepreneurial advice to business that seek to become part of the local economy capital ecology. Financial service and business tips from co-op staff would serve business and investor — and enrich the local economy. 

If an investor wanted to invest solely in a favorite bike shop or a local manufacturer, the co-op would have to come up with ways for the investor to be rewarded for the particular choice. That rebate or refund would have to avoid becoming a federally regulated security. But practically it might become a form of local currency, representing the co-op’s claim to a certain part of selected company.  

Eventually investors could swap the rebates among themselves, and the chits could become a parallel currency under the co-op’s seal. 

Alternatively, if the co-op couldn’t arrange particular investments, rebates would be based on the sum of all the companies combined, and the rebate would represent the co-op itself, with profit generalized across all investors. 

Still, rebates in that form could become currency. The investor’s reward could be on the order of 5 percent or 10 percent, well beyond the 2.6 percent profit Mr. Shuman estimates comes from investment in the national economy. 

It’s fine to invest in public companies such as VW. But it’s better if we can invest in a locally owned company, so the profit will stay in Chattanooga


— David Tulis writes for Nooganomics.com, which covers local economy and free markets in Chattanooga and beyond.

City Officials Should Tour Our Roads

As we near the election in March, now would be a good time for our city officials who are up for re-election to spend a little time exploring their realm.   I would invite them to take a scenic tour starting at Lake Resort Drive paying attention to the portion of the road which was recently repaired which now appears to be sliding back towards the lake again.  Follow ... (click for more)

Senator Alexander: Senate Should Promptly Confirm Betsy DeVos

Democrats desperately are searching for a valid reason to oppose Betsy DeVos for U.S. Education Secretary because they don’t want Americans to know the real reason for their opposition.  That real reason? She has spent more than three decades helping children from low-income families choose a better school. Specifically, Democrats resent her support for allowing tax dollars ... (click for more)

Chattanooga Police To Add 14 Officers After Violent Weekend; New System To Allow Local Testing Of Shell Casings

In the wake of a weekend in which five people were shot with two dying, the Chattanooga Police Department is adding 14 more officers, Mayor Andy Berke and Chief Fred Fletcher said Monday. The department is also utilizing a new system that will allow local testing of shell casings and avoid a long wait time after sending them off to Nashville. Chief Fletcher also said there ... (click for more)

McReynolds, Brooks Arrested After Police Chase Ends In Crash On Monroe Street; Accord Had Been Stolen From Dealership

Marquis McReynolds, 25, and Jermichael Brooks, 23, were arrested after a police chase on Monday.   A task force including the ATF, FBI, and Chattanooga Police Department officers pursued a stolen vehicle. That pursuit resulted in a traffic crash and the arrest of two convicted felons.   The pursuit began at 5200 Highway 58 just after 7 p.m. after police ... (click for more)

Big McClendon Curtis Leads Central Past Hixson

Central coach Rick Rogers knew this would be a long season for his Purple Pounder basketball team after his top seven players graduated last year. He’s exactly right, but things are headed in the right direction for Rogers as his team improved to 5-10 overall and 3-6 in District 6-AA with a heart-stopping one-point win at Hixson Monday night. That’s two wins in a row and the ... (click for more)

Cleveland, Bradley Central No. 1 And No. 2 In State Wrestling Poll

Now in its 25th year, The Poll is primarily a measure of  dual meet strength  with some consideration to individual tournament strength.   Votes are cast by a state-wide panel of high school wrestling coaches and are based on a maximum Power Ranking of 100%.   STATE POLL:   RANK ... (click for more)